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They Were Enjoying Their Dream Home And Then ...

They were watching the game on the big screen thinking how great life was. They had it all, the job, the dream home, the family. They were at the peak and nothing could bring them down! Then suddenly, everything changed in the blink of an eye! They felt just a tiny drop of water smack them on the forehead. Was the roof leaking? Had the pipes burst? What is going on?

Many people buy a house, move in and continue to live as though they are still renting, expecting that someone else will pay for major repairs. Then they get blindsided with the BIG surprise! You can avoid that by preparing now.

What is the BIG surprise? Something breaks, wears out or needs updating. Like your roof or your air conditioner. That's right, BIG ticket items can blindside you. That's why you need to begin preparing RIGHT NOW so these items do not become a nightmare.

You begin by setting up a "boiler fund". The term "boiler" simply refers to expensive items that can breakdown. A boiler fund is a savings account that is regularly added to and used ONLY for home repair and maintenance.

The 3 Step Process

Step 1: Gather enough money to open a savings account. Check with your bank to find out the minimum amount required to open a savings account. Don't wait until you have more. Open that account TODAY!

Step 2: Deposit a pre-determined amount into the savings account each paycheck. If you use direct deposit for your paychecks, set it up so that a portion will automatically go into the "boiler fund" savings account.

Step 3: Leave the account alone. Don't use it to buy a car or a phone or go on vacation. It is good to have a savings account for those items but THIS account is for home repair and maintenance. 

How much should you put in the account each paycheck? Probably as much as you can afford. However, the best answer is to estimate how much you need and when you are most likely to need it. Here are some ideas.

Roof

How old is your roof and what is its life expectancy. If you have composite shingles then your roof is probably expected to last 25 years. If the roof is 10 years old then you have 15 years left. Depending on the size of your house and the complexity of your roof, the average home owner can expect a roof replacement to be between $5,000 and $15,000. You can ask a roofer what your roof replacement would cost and how much time you have left on your roof. You only need a rough estimate.

Let's say $8,000 and you have 15 years left. Oh, one more thing, let's say you get paid every 2 weeks. Here's your equation.

$8,000 / (15 years * 26 paychecks a year) = $20

You need to put away $20 per paycheck so that in 15 years you'll have enough to pay for that new roof.

HVAC

You will need to know what it would cost you to replace your heating and air conditioning system. There are several factors that go into determining that cost. You will also have to know about how many years you have left on your HVAC. Talk to an HVAC professional and then use the formula above.

Plumbing

Every homeowner has plumbing problems at one time or another. Anything from a leaky faucet to replace EVERYTHING! Plan on replacing EVERYTHING at some point. Plumbing wears out. Trust me. To come up with an amount, talk to a plumber and get a rough estimate. If your plumbing is fairly new you can use 30 years for how long you have to replace it. Then use the formula above.

Flooring

Yep, flooring wears out AND goes out of style. If you ever plan to sell your house you will probably have to replace the flooring. If you don't sell your house there will come a time when you will want to replace your flooring. For floor numbers, take your total square footage and multiply it by 3. Talk with a professional for how long you have left on your floors. Of course some of that may be personal taste. You may want to change the flooring before it wears out just because you want something different. Then use the formula above.

Appliances

Always good to throw some in for replacing or repairing appliances. Give a rough estimate on cost and number of years.

Once you get a figure for each of these major items, add them together. It may come out more than you expected or can afford right now. Don't worry, this is a goal. Start with as much as you can and then add to it as your income grows and your situation allows. Remember, it is better to put something aside than nothing.

Your Daphne and Spanish Fort real estate experts!

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